Category: Uncategorized

On the Blog: Good News for Low Income Taxpayers

Posted on by The Progressive Policy Institute

IRS Free File and VITA programs should be improved not discarded.

According to the Internal Revenue Service (IRS), 90 percent of taxpayers hire paid tax preparers or utilize tax preparation software to file their taxes.

For low-income families the cost of tax preparation can significantly reduce the value of their refunds. A 2016 study by the Progressive Policy Institute (PPI) found that low-income taxpayers in the Washington-Baltimore metropolitan areas can expect to spend between 13 and 22 percent of the average Earned Income Tax Credit (EITC) refund when using tax preparation services.

One way working families can give themselves a “tax break” is to take advantage of the IRS Free File program. This public private partnership between the IRS and the software industry makes free online tax preparation and electronic filing available to 70 percent of the taxpaying population, and together with the Volunteer Income Tax Assistance (VITA) program serve between 2.5 to 3 million needy taxpayers a year.

In recent years some have criticized these programs for low enrollment rates and encouraging deceptive business practices.  But a recent third-party report commissioned by the IRS shows that the Free File program (while in need of improvement) has saved taxpayers $1.6 billion and is responsible for 53 million free returns since 2002.  

One way working families can give themselves a “tax break” is to take advantage of the IRS Free File program or the Volunteer Income Tax Assistance program. The Free File program, public-private partnership between the IRS and the software industry, makes free online tax preparation and electronic filing available to 70 percent of the taxpaying population and currently serves 2.5 to 3 million taxpayers annually. The Volunteer Income Tax Assistance (VITA) program helps another 3 to 3.5 million taxpayers file every year.

Marshall for The Hill: “Trump’s Syria blunder is escapism not strategy”

Posted on by The Progressive Policy Institute

President Trump’s decision to pull U.S. troops out of northern Syria – opening the door to the Turkish invasion that began Wednesday – bears all the distinctive hallmarks of his “America First” foreign policy. It’s impulsive, strategically vapid and morally obtuse.

In justifying bolting from Syria, Trump says he wants to extricate the United States from “ridiculous endless wars” in the Middle East. Such rhetoric goes down well with neo- isolationists like Sen. Rand Paul (R-Ky.). But the complaint that America is mired in “endless wars” also is a staple of the progressive left, which sees U.S. actions as mostly to blame for the region’s longstanding sectarian and ethnic conflicts.

It’s time to retire this mindless trope. U.S. forces aren’t engaged in the Middle East because Americans are addicted to war or the trappings of superpower status. They are fighting mainly to contain the very real threat of Islamist terrorism.

Read Will Marshall’s full op-ed here. 

Osborne, Langhorne for Medium: “The Progressive Roots of Charter Schools”

Posted on by The Progressive Policy Institute

Listening to the rhetoric of Democratic presidential candidates, one would think charter schools were a Republican initiative opposed by all progressives. Read the full piece here on Medium.

By David Osborne and Emily Langhorne

Listening to the rhetoric of Democratic presidential candidates, one would think charter schools were a Republican initiative opposed by all progressives. Bernie Sanders calls for a halt to all federal funding for charter schools. Elizabeth Warren joins him in condemning for-profit charters.

Former Vice President Joe Biden, who served under a president enthusiastic about charters, told the American Federation of Teachers at a forum, “The bottom line is it [chartering] siphons off money for our public schools, which are already in enough trouble.”

Even candidates who have been charter supporters in the past, such as Michael Bennet, Beto O’Rourke, and Julian Castro, have had nothing positive to say about charters. All seem afraid to draw the ire of the teachers’ unions, which contributed $64 million to candidates, party organizations, and outside spending groups during the 2016 election, according to the campaign finance tracking organization, OpenSecrets.

So it may come as a surprise to readers that chartering originated as a Democratic initiative. Democrats spearheaded charter legislation in most of the early charter states, and Democratic Presidents Bill Clinton and Barack Obama enthusiastically supported charters, pushing through federal legislation to provide funding.

The innovative Democrats who pioneered chartering were looking for a better organizational model for public education — a system designed for the Information Age rather than the Industrial Era. In their new approach, an “authorizer” — usually the state or local school board — grants performance contracts to groups of individuals or nonprofit organizations that apply to open new public schools. Exempt from many of the rules that constrain district-operated schools, they are encouraged to innovate, to create new learning models that will appeal to children bored or otherwise dissatisfied with traditional schools. If a school succeeds, its contract is renewed; if it fails, it is closed. Families can choose between a variety of schools. Districts lose their monopolies on taxpayer-funded education, and their schools can no longer fail students for generations; the competition either takes away their students or forces them to improve.

The new schools are called “charter schools” because their performance contract is a charter. Over the past two decades, cities that have embraced chartering, such as New Orleans, Washington, D.C., Denver, Newark, and Indianapolis, have experienced profound student growth and school improvement. The charter formula — school-level autonomy, accountability for results, diversity of school designs, parental choice, and competition between schools — is far more effective than the centralized, bureaucratic approach that developed more than a century ago.

Teachers at charter schools tend not to unionize, however, so as the charter sector grows, union membership shrinks. By 2000, union leaders and their allies had gone to war against charters. They claim that charters are a product of “corporate reformers,” a right-wing effort to “privatize” our public schools. These accusations are nonsense. More accurately, they are lies born of self-interest, designed to protect the jobs of mostly white, middle-class teachers and union officials at the expense of mostly poor, minority kids.

The Origins of the Charter Concept

In 1988, University of Massachusetts Education Professor Ray Budde, a former principal, published Education by Charter: Restructuring School Districts. He proposed that districts allow teams of teachers to “charter” a program within a school for three to five years.

The following July, Albert Shanker, then president of the American Federation of Teachers, expanded on the concept in his New York Timescolumn, suggesting that teams of teachers charter whole schools, not just programs. Shanker believed that the U.S. needed school systems that provided educators with autonomy and “genuine accountability” for results. He urged school systems to charter schools with a variety of teaching approaches, so that “parents could choose which charter school to send their children to, thus fostering competition.”

In 1995, just two years before his death, Shanker told Republican Congressman Steve Gunderson, who was writing an education reform bill for Washington, D.C., that “every school should be a charter school.”

Democrats Lead the Way in Early Charter States

In 1988, after reading Shanker’s column, members of a nonpartisan civic organization in Minnesota called the Citizens League began working on a report that outlined the framework for charter legislation, led by former League Executive Director Ted Kolderie. In October, when Shanker spoke at the Minnesota Foundation’s annual Itasca Seminar, Democratic State Senator Ember Reichgott Junge and Democratic State Representative Ken Nelson were in the audience. Afterward, Reichgott Junge began drafting charter legislation, with Kolderie’s help, and in 1989 she and Nelson introduced the bill. It passed the Senate but failed in the House, two years running. Finally, in 1991, with help in the House from Democratic Rep. Becky Kelso, a compromise version finally passed. And in 1992, a group of veteran public school teachers opened City Academy in St. Paul, the nation’s first charter school.

In California, conservatives were preparing a voucher ballot initiative that would allow Californians to use tax dollars to send their children to any school they chose, public or private. Democratic State Senator Gary K. Hart, who understood that the electorate was deeply frustrated with public schools, decided the Democrats needed legislation to counter the voucher movement. Hart felt that vouchers relied too much on a free-market approach, threatening the equal opportunity that should be built into public education. A former teacher, he’d already sponsored a bill that gave 200 public schools more autonomy in exchange for more accountability. Chartering was the next logical step: a third way between vouchers and traditional systems.

Democratic Assemblywoman Delaine Eastin introduced a charter bill at the same time, but it required sign-off by the district’s collective bargaining unit for charter approval. Teachers unions pressured Hart to amend his bill to do the same, but he refused. He also stood his ground against demands related to parent involvement and teaching credentials. Hart believed such decisions should be left up to school founders and leaders. He wanted a simple bill that would create a system with limited bureaucracy, in which schools were judged on the basis of student outcomes, not compliance with rules.

Both bills passed the legislature, but Republican Governor Pete Wilson vetoed Eastin’s and signed Hart’s into law. The legislation took effect on January 1, 1993, and that fall, 44 charters opened.

The third bill passed in Colorado, where Democratic Governor Roy Romer was instrumental in pushing it through the legislature. In 1992, Republican Senator Bill Owens and Republican State Representative John James Irwin introduced a bill to create a new, independent school district to authorize and oversee “self-governing” schools. That bill died in the Senate Education Committee, whose chairman, Republican Senator Al Meiklejohn, stood firmly against choice and charters.

Irwin died before the 1993 session, so Owens and his allies reached out to Democratic State Representative Peggy Kerns, to sponsor a new charter bill in the House. The unions and other establishment groups opposed the bill, and Meiklejohn neutered it with amendments in the Senate.

In the House, Kerns and fellow Democrat Peggy Reeves re-amended the Senate bill so that it more closely resembled the original. Gov. Romer met with the Democratic caucus and rallied support on the House floor. The bill narrowly passed, the two bills were reconciled in conference committee, and both houses passed the new version. On June 3, 1993, Romer signed the Charter Schools Act into law.

In Massachusetts, Democratic State Senator Thomas Birmingham and Democratic State Representative Mark Roosevelt, then co-chairs of the Joint Committee on Education, spent several years developing the 1993 Massachusetts Education Reform Act, which sought to reform the state’s education financing system while increasing academic expectations and school accountability.

In the fall of 1991, a mutual friend introduced Roosevelt to David Osborne, who had recently finished a new book, Reinventing Government. Roosevelt described for Osborne the higher academic standards he planned to include in the legislation. Osborne said, “That’s great; standards are important. But what are you doing to do when districts don’t meet them?”

Roosevelt explained that the state would take over underperforming districts. Osborne pointed out that takeovers would stir up intense resistance, severely limiting their use. You need another strategy, Osborne told him. You need choice and competition.

Shortly afterwards, he introduced Roosevelt and his staff to the concept of charter schools. A few weeks later, when Ted Kolderie told Osborne he was planning a trip to Boston, Osborne put him in touch with Roosevelt, and Kolderie helped Roosevelt and his staff write charter language for the bill. When the teachers unions came out against the charter proposal, Roosevelt and Birmingham introduced a cap on the number of charter schools, as a compromise.

In 2016, Roosevelt and Birmingham urged Massachusetts to raise its cap: “We included charter public schools in the 1993 law to provide poor parents with the type of educational choice that wealthy parents have always enjoyed…. We now have enough data to conclude that charter schools have exceeded expectations. In our cities, public charter schools consistently close achievement gaps. No wonder more than 32,000 children are on charter school waiting lists. Imagine being one of the parents crushed with disappointment when your child is not selected.”

By the end of 1994, seven more states had enacted charter laws. Democrats spearheaded the legislation in Georgia, Hawaii, and New Mexico, Republicans in Arizona and Wisconsin, and there was overwhelming bipartisan support in Michigan and Kansas. Of the next 23 states, which passed bills in the rest of the ’90s, all but three had strong bipartisan support.

Even today, most education reformers are Democrats. A study by the American Enterprise Institute (AEI) showed that 87 percent or more of the political contributions made by staff at education reform organizations over the past decade went to Democratic candidates. “The leading participants in the school-reform ‘wars’ are mostly engaged in an intramural brawl,” the authors concluded, “one between union-allied Democrats and a strand of progressive Democrats more intent on changing school systems.”

As reform-minded Democrats attempt to put children first, union-backed Democrats block them. They betray America’s children — particularly those whose parents lack the money to move into a district with strong public schools or send their children to private schools.

Voters should ask this year’s presidential candidates: Which type of Democrat are you?

David Osborne, author of Reinventing America’s Schools: Creating a 21st Century Education System, leads the education work of the Progressive Policy Institute. Emily Langhorne, a former associate director of that project, is now at DAI, which works on economic and social development in low-income countries around the world.

On the Blog: UBI Is The Wrong Way To Fight Poverty

Posted on by The Progressive Policy Institute

Critics say that UBI risks discouraging people from working, which would shrink our economy and thereby lower U.S. living standards.

by PPI Summer Intern Avi Lipton

In his long-shot bid for the presidency, Andrew Yang has brought fresh attention to an old idea: universal basic income. Yang’s UBI proposal, which he calls “Freedom Dividends,” would guarantee $12,000 a year to every American over the age of 18, without any other qualifications. Yang claims that this new entitlement would achieve many different policy goals, including reducing poverty, replacing the income of workers whose jobs are killed by automation, and helping people pay their bills while they pursue socially constructive activities other than paid work.  

However, critics say that UBI risks discouraging people from working, which would shrink our economy and thereby lower U.S. living standards. What’s more, giving unearned benefits to every American regardless of need would be massively expensive, and Yang’s proposals to pay for his Freedom Dividends aren’t plausible. Yang’s plan stands in sharp contrast to proven policies, such as the EITC, that put cash into the hands of people who need it without discouraging work or spending huge amounts on payments for wealthy people. Does an idea that could undermine economic growth, steer public benefits to the wealthy, and swell public deficits really deserve to be called progressive? 

Of course, everyone would like to have higher incomes and more leisure, but there is this nagging question of how we pay for it. The best way is to encourage private employers to compete for workers by offering higher wages, or positioning workers better to negotiate for a fair wage. But UBI is simply a no-strings-attached wealth transfer that erodes the link between work and economic reward.  If UBI induces enough people to work less, economic growth will slow down. This could trigger a vicious cycle in which policymakers keep increasing the size of the UBI to compensate for a weaker economy.  

UBI is also poorly targeted. Many of the benefits would go to wealthy Americans who don’t need support, at huge cost to taxpayers. Providing every adult in the country $12,000 a year would cost about $3 trillion annually, which is equivalent to 87 percent of all projected federal revenues in 2019. Even without UBI, the federal government is already expected to outspend its revenues by over $1 trillion next year.

Congress would have to raise taxes substantially or borrow heavily to fund Freedom Dividends.  Yang proposes to raise a portion of these revenues with a 10 percent value added tax (VAT). But a 10 percent VAT would only raise between $600 billion and $1.3 trillion in additional revenues, depending on what would be subject to the tax, and the measures he proposes to cover the rest of the costs would not be sufficient to cover the $1.7-$2.4 trillion difference. 

If UBI doesn’t make economic sense, what does? Expanding the Earned Income Tax Credit (EITC) is a better way to supplement the market income of Americans in need. The EITC is a refundable tax credit that phases in at a percentage of a taxpayer’s earned income until the credit reaches a maximum benefit. If the taxpayer’s income rises above a certain threshold, the EITC begins to phase out. This benefit structure incentivizes taxpayers whose incomes are in the phase-in region to work more because each additional dollar they earn also raises the value of their tax credit. The opposite is true for people whose incomes are higher than the phase-out threshold, as earning more income reduces the value of the credit, which may dampen the incentive to work. But people who do not have jobs only face an incentive to begin working, and empirical evidence shows that the EITC’s incentives to work strongly outweigh the disincentives. As such, expanding the EITC would put money in the hands of working people without the risk of discouraging too many people from participating in the labor force.

An EITC expansion would be better targeted than a UBI towards those who need support the most, so it can provide significant benefits to those who truly need them for a fraction of the cost. The EITC’s phase-out structure directs almost all of the credit to households in the bottom 60 percent of the income distribution, and the largest benefits to those in the bottom 40 percent. In 2017, the EITC lifted 5.7 million people above the poverty line (including 3 million children) without paying out large benefits for wealthy people that a UBI would. 

One option for expanding the EITC would be to adopt PPI’s Living Wage Tax Credit (LWTC), which would provide additional benefits worth up to $2,900-$7,500 (depending on the number of children) to low-income households for only $1.6 trillion over 10 years. A similarly structured program that cost 10 times as much would still be roughly half as expensive ($16 trillion over 10 years) as Yang’s Freedom Dividend program ($30 trillion over 10 years). 

Progressives – including Democrats running for President – ought to resist the siren song of UBI and instead embrace policies like the Living Wage Tax Credit and others in PPI’s Progressive Budget for Equitable Growth that are progressive, fiscally responsible, and empower people to participate in the economy.

Press Release: “Court Ruling Continues ‘Groundhog Day’ Cycle for Consumers”

Posted on by The Progressive Policy Institute

PPI Executive Director Lindsay Lewis calls decision a ‘wake up call’ for Congress to pass bipartisan net neutrality bill

WASHINGTON – PPI’s Lindsay Lewis Statement on Court Decision Today on FCC: “This is a wakeup call for Congress to break the entrenched gridlock on net neutrality and pass a bipartisan bill that will permanently protect an open internet.  Absent bipartisan action, today’s ruling will leave consumers in limbo for years to come, while opening the door to a patchwork of different state standards that could splinter the internet and hurt consumers.  Waiting several more years just to restart the same Groundhog’s Day cycle at the FCC isn’t a good option.  Congress needs to come together and find a bipartisan path forward to enact permanent, clear, enforceable net neutrality rules through statute.”

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Contact: media@ppionline.org

Kane for The Hill: “Fixing America’s heath-care system is going to require radical reform: price caps”

Posted on by The Progressive Policy Institute

Americans spend more money on health care because prices are higher here than anywhere else in the world. Our system is fraught with waste, our providers (physicians and hospitals) are paid more; and goods like biopharmaceuticals and medical devices are more expensive. On average, U.S. hospital prices are 60 percent higher than countries in Europe and physicians make twice as much as their counterparts in other advanced countries.

But despite spending almost a fifth of the U.S. economy on health care, Americans have no better outcomes (often worse) than other advanced countries. But as long as we are spending so much on health-care services, we don’t have enough funding to go after other upstream solutions to improve health outcomes — things like housing, environment, education and diet, all of which impact a person’s health status.

Read Arielle’s full op-ed by clicking here.

The Next 10 Million Jobs–Part 1

Posted on by The Progressive Policy Institute

This post begins our series on “The Next Ten Million Jobs.”  Based on our analysis of the latest BLS employment projections, the U.S. economy will produce roughly 10 million jobs between now and 2030. The question is what kind of jobs will they be; how can Americans prepare for emerging new occupations; and what can policymakers do to improve the job situation.

We use the BLS projections as a starting point, but we don’t take them as gospel. First, we extend them from 2028 to 2030, to actually give us a ten-year projection horizon for the presidential race of 2020. But we also dig deep into some of the assumptions underlying the official projections. In particular, they can be thought as embodying a cautious extrapolation of current technological trends. For example, the BLS expects the number of heavy and tractor-trailer drivers to grow over the projection horizon, rather than being suddenly wiped out by autonomous trucks.

But recent history shows that technological change can drive sudden shifts in jobs, and create emerging new occupations. For example, the rise of ecommerce fulfillment centers means that the number of workers employed in the warehousing industry grew much faster than expected. Based on the BLS projections released in 2009, the warehousing industry was only expected to add 80K jobs between 2008 and 2018. Instead, the actual gain was closer to 500K.

Similarly, in 2007  no one could have predicted the rise of the App Economy, which has created so many new jobs since the introduction of the iPhone and all the smartphones to follow. Our latest estimate  shows that the U.S. has roughly 2.2 million App Economy jobs, including a conservative calculation of spillover jobs.  These jobs are supported by a bevy of technologies, including the iOS and Android mobile operating systems and the related app stores; fast and extensive mobile networks,  which operators such as AT&T and Verizon are spending billions to upgrade to 5G; and an incredible number of mobile applications for consumers and businesses, written and maintained by both small app developers and app developers working for large companies.

In this series of posts we’re going to try to identify some emerging new occupations and industries that have the potential to create new job opportunities for Americans. These may or may not correspond to the BLS projections.

But for this first post, we start with the single biggest headline from the BLS projections: The importance of healthcare and social assistance jobs for the labor market. By our estimate, out of 10 million net new jobs by 2030, more than 4 million will be in healthcare and social assistance. As a result, between now and 2030, growth of healthcare and social assistance jobs accounts for 44% of the net growth of nonagricultural wage and salary jobs. That’s up from 39% in the period from 2007 to 2018.

In effect, healthcare has become the black hole of the labor market, sucking in workers at a prodigious rate.

From the perspective of young people entering the labor market, these huge numbers send a clear signal that healthcare is the place to be.  Why wouldn’t you aim for the industry that is creating almost half of new jobs?

The problem for policymakers, though, is that the rapid growth of health care jobs is the single biggest driver of healthcare spending increases, as we have noted in past posts, by a wide margin.  So the only way to restrain healthcare spending is to hold down health care job growth.

This takes on special meaning as proponents of various healthcare reforms try to find a way to hold down costs to make the numbers works. In this context, it should also be said that many European countries, with different health care systems than ours, are seeing an equally rapid growth in healthcare and social assistance jobs. For example, in Germany, health and social assistance jobs amounted to 37% of net new jobs created between 2008 (the business cycle peak) and 2017, the last data available. That’s based on OECD data. 

Going forward, we can imagine two alternative scenarios to the BLS healthcare employment projections. In one scenario, a Democratic victory in 202o leads to expanded healthcare coverage, either in the private sector or by offering a public option. In that case, the number of jobs will increase faster than expected, and young people who go into health care will find a very strong labor market.

In the other scenario, policymakers try to hold down the growth of healthcare costs by boosting labor productivity and restraining the growth rate of health care jobs. That means young people who go into health care run the risk that health care job growth will be less than expected.

 

 

 

 

 

 

 

 

 

 

 

 

Marshall for Medium: “Trump Has Earned Impeachment”

Posted on by The Progressive Policy Institute

Originally shared on PPI’s Medium channel.

Donald Trump’s shambolic presidency has been one long, nauseating exercise in defining American democracy down. He’s relentlessly undermined the norms that uphold our Constitutional order, while abusing the powers of the presidency to pursue his own selfish interests at the expense of our nation’s interests.

There is no clearer example than his infamous July 2019 call with Ukrainian President Volodymyr Zelenski. Trump pressed Zelenski to dig up dirt on Vice President Joe Biden, promising a meeting between the two presidents and warmer Ukraine-U.S. ties in return. That Trump sees nothing wrong in soliciting a foreign country to interfere in America’s presidential election for his personal benefit tells you all you need to know about this man’s deformed moral sense. 

To her credit, Speaker Nancy Pelosi until now has resisted pressures from her party’s left wing to launch a premature bid to oust President Trump from office. Now, to protect the integrity of U.S. elections against a rogue president, she’s announced a House inquiry into impeachment. It’s the right and patriotic thing to do. 

True to form, Trump is trying to lie and bluster his way out of this self-inflicted crisis, polluting the air with ludicrous conspiracy theories, sliming the Biden family, and casting himself as the victim of Democrats, the media and the fictive “deep state.” He and his minions also are slurring Rep. Adam Schiff, chairman of the House Intelligence Committee, whose systematic amassing of devastating facts about Trump’s efforts to obstruct the Mueller investigation should be a model for the impeachment inquiry.

To the everlasting shame of a once grand U.S. political party, Trump is abetted in his public disinformation campaign by the usual gaggle of robotically partisan Republicans. John McCain must be spinning in his grave as even his former protégé, Sen. Lindsay Graham, turns into a Trump sycophant. That only a handful of GOP leaders – including Sen. Mitt Romney – have been willing to venture even mild criticism of Trump’s outrageous abuse of power tells you all you need to know about how thoroughly he has corrupted his party. 

Now that Trump has brought impeachment on himself, it’s crucial for Congress to proceed in a disciplined and dignified way. The inquiry should steer clear of Trump’s long catalogue of misdeeds and focus narrowly on the complaint from the intelligence community whistleblower that the president sought to induce Ukrainian officials to investigate one of his main political rivals. That complaint cites “multiple U.S. Government officials” – including some who work at the White House – as sources. These people need to be heard from, with due privacy protections to shield them Trump’s vindictive wrath.  

The House inquiry should also focus on the White House attempt to cover up Trump’s efforts to get Zelensky to “play ball” by moving the record of Trump’s call onto a computer server reserved for top-secret information. Even if Trump describes his call with the Ukrainian leader as “perfect,” White House aides obviously felt otherwise.

Now the House needs to methodically build and lay before the public a solid case for impeachment. Speaker Pelosi will have her hands full discouraging histrionics from her party’s most reflexive partisans, which would likely play into the Trump-GOP strategy of dismissing the crisis as Washington swamp gas voters should ignore. Here the sure hand she’s shown on impeachment thus far inspires confidence. 

You’ll see reams of punditry on the subject, but no one knows how the impeachment drama will unfold. The conventional view today is that there’s no way 20 Republican Senators will join Democrats in voting to convict Trump of high crimes and misdemeanors. That means the U.S. government could grind to a halt over the next year as lawmakers get consumed in an impeachment battle that inevitably must end in failure – and that leaves Trump crowing over having yet again evaded the reckoning he so richly deserves. 

Maybe so, but we are past political calculation at this point. Every Member of Congress has sworn an oath to protect and uphold the U.S. constitution. Congress has a duty to bear witness to Trump’s vandalizing of American democracy – and put its case plainly before the voters who will make ultimately decide the issue next year. 

Affordable Health Care for All: An American Solution to High Costs and Coverage Gaps

Posted on by The Progressive Policy Institute

America’s sprawling health care economy faces many vexing challenges. But the root of the problem is simple: Medical care in the United States costs too much. Our overpriced health care system leaves too many uninsured, eats into workers’ wage growth, strains public budgets, and keeps families in fear that one medical emergency will leave them bankrupt. Health care costs are the top financial concern of families – greater than taxes, housing, or college expenses. (1), (2)

President Donald Trump and the Republican Party have aggravated public anxieties by failing to produce a credible plan for controlling health care costs and covering the uninsured. Instead, they have waged a partisan crusade to kill the Affordable Care Act (ACA), which protects Americans with preexisting conditions and has enabled 17 million people to get insurance coverage. Even after suffering a clear rebuke from voters in the 2018 midterm elections, Trump Republicans persist in trying (3) to sabotage the ACA in the courts. Thus it is no wonder Americans trust Democrats more than Republicans to address their health care anxieties. (4)

Democrats, however, could squander that trust by overreaching. That’s the danger posed by several leading 2020 presidential candidates endorsing the abolishment of private insurance and replacing it with a government-funded, national health care system. It would require a staggering $32 trillion in new government spending over ten years and would massively disruptive coverage for the 155 million Americans forced to give up their employer sponsored insurance, risking a public backlash of seismic proportions. (5)

Furthermore, without transforming the delivery and payment system structure, a fee-for- serviced based Medicare-for-All program would not necessarily improve outcomes or restrain cost growth over time. Without reform, it would likely entrench fee-for-service medicine and limit the spread of accountable care arrangements that pay for prevention, wellness and healthier outcomes for patients.

The United States spends 18 percent of its gross domestic product on health care – almost one and a half times more than Switzerland, the country with the second-highest rate of healthcare spending. (6) Yet outcomes here are worse than in other advanced countries. Compared to the health care systems of 10 other high-income countries, the United States ranks last in access, equity, and overall health status. (7)

With increasing premiums, co-pays, drug costs, and surprise bills, it’s not hard to see why middle-class families are feeling the squeeze. Americans spend more on medical services because prices here are higher than elsewhere. Our system is fraught with waste, our providers (physicians and hospitals) are paid more, and goods like biopharmaceuticals and medical devices are more expensive. (8) On average, U.S. hospital prices are 60 percent higher than countries in Europe (9) and physicians make twice as much as their counterparts in other advanced countries. (10)

Americans shell out an average of $10,739 per person per year on medical care. (11) Families pay $5,547 annually toward their employer-sponsored coverage, which costs roughly $22,885 for a family of four. (12) (13) Out-of- pocket costs have grown from $601 per person in 1970 (in 2017 dollars) to $1,124 per person on average in 2017. (14) Over the next decade, the Centers for Medicare and Medicaid Services (CMS) predicts that half of the estimated 5.5 percent average annual growth in health care spending will come from price increases, while just a third of the spending growth will come from greater consumption of health care services, even as the huge baby boomer generation ages and needs more care. (15)

For too long, however, the health care debate has been focused on who pays for care and what is covered rather than on why health care costs so much in the first place. Republicans routinely push to move the cost of care onto individuals and away from government subsidies, while Democrats go after short-term junk health insurance policies, huge drug price increases, and surprise health care bills. As former Oregon Gov. John Kitzhaber, MD illustrates, this framing presents Americans with a false choice between cost and access. (16)

Medicare-for-All may be bold, but in essence it’s just a financing mechanism and without necessary delivery reform will not improve America’s flawed health care system. In this report, PPI offers a progressive alternative to Medicare-for-All aimed at lowering the overall cost of medical care and creating stronger incentives for reform and better health outcomes.

Affordable Health Care for All is a comprehensive plan to discipline medical prices, plug gaps in coverage and bring Medicare and Medicaid into the 21st century. It would cap medical costs and encourage insurers to pay for the value, not the volume, of medical services. By reducing

the overall cost of medical care in America, this plan also would free up resources that can be invested in housing, nutrition, public safety and other social initiatives that improve public health and keep people from needing medical care in the first place.

Progressives don’t need to import “single payer” plans from other countries to solve our health care problems. PPI’s plan offers a distinctively American solution to high costs and coverage gaps. It would leave room for choice and competition; promote more efficient use of health care resources; and, put America in the vanguard of medical research and innovation – all while protecting Americans from outrageous health care prices.

Affordable Health Care for All has five key components:

      • Cap out-of-network provider prices in the private insurance market
      • Build on the ACA’s coverage gains and insurance reforms
      • Allow older Americans to buy into Medicare
      • Update and streamline the Medicare program
      • Move Medicaid from fee-for-service to value-based payments

 

Read the full report:

 

The App Economy in India

Posted on by The Progressive Policy Institute

India is one of the premier technology countries in the world. According to one forecast, India will overtake the US as the world’s largest developer population center by 2024. (1) India is also one of the leading countries for mobile app downloads, due to its more than 500 million smartphone users. (2)

At the same time, as we will show in this report, India also has a very strong App Economy. We estimate that India has 1.674 million App Economy jobs, as of August 2019. That’s up from 1.208 million as of 2016, a 39 percent increase. By comparison, the United States had 2.246 million App Economy jobs as of April 2019, and the European Union (plus Switzerland and Norway) had 2.093 million App Economy jobs as of July 2019.

 

Press Release: “Price caps will make health care more affordable for all Americans”

Posted on by The Progressive Policy Institute

For Immediate Release (9/12/19)

Contact: media@ppionline.org, 202-525-3926

WASHINGTON – Price caps on out-of-network provider prices would cut in-network prices, according to Arielle Kane, Director of Health Care, in a new analysis from the Progressive Policy Institute (PPI). This aggressive proposal to go after the root cause of high health care spending: high prices. 

Americans spend more money on health care because prices are higher here than anywhere else in the world. Our system is fraught with waste, our providers (physicians and hospitals) are paid more, and goods like biopharmaceuticals and medical devices are more expensive. On average, U.S. hospital prices are 60 percent higher than countries in Europe and physicians make twice as much as their counterparts in other advanced countries.

But despite spending almost a fifth of the U.S. economy on health care, Americans have no better outcomes (often worse) than other advanced countries. But as long as there is so much spending on health care services, there isn’t enough funding to go after other upstream solutions to improve health outcomes – things like housing, environment, education, and diet, all of which impact a person’s health status. 

PPI has outlined how we can limit health care spending, encourage delivery reform, and invest the savings in upstream social services without the disruption and inflation in federal spending a single-payer system would bring. 

Among many other comprehensive reforms in the plan, PPI proposes capping insurers’ out-of-network payment rates – starting at 200 percent and then steadily decreasing to 120 percent of Medicare rates. It would lower in-network prices because providers (including hospitals) have no incentive to remain outside of networks if the price they can charge is capped at levels comparable to what they would receive for delivering services to patients in network. This allow all Americans to benefit from the leverage of the government’s bargaining power without dramatically increasing government spending.

Capping out-of-network bills more broadly – not just for surprise bills – would have a huge impact on rates over all. It would place a de facto limit on all health care prices, tied to Medicare rates, and would create a stronger incentive for hospitals and doctors to negotiate value-based reimbursement arrangements with insurers. 

“Endorsing price regulation in the private health care marketplace is not a step we take lightly,” said Kane. She continued, “but private insurers have demonstrated that they are unable to impose reasonable limits on what health care providers charge Americans for their services.” As a result, health insurance premiums keep climbing – along with spending on public subsidies intended to cushion working Americans from sticker shock. By capping prices above Medicare reimbursement rates, the plan would apply greater price discipline over time, so that providers wouldn’t see a precipitous decline in their earnings. More fundamentally, we believe a price cap or default price would speed the move away from fee-for-service towards a more efficient model for rewarding high-value, innovative health care.

The PPI proposal also includes many other substantial reforms – such as bolstering the ACA, allowing older Americans to buy into Medicare, modernizing Medicare for the 21st century – including prescription drug plan reform, and transition Medicaid to the delivery model of the future. “Relying on one national fee-for-service plan may hold down prices in the short-term – but without major reform to improve care delivery, it would not address needed upstream interventions or prevent a rise in utilization that could driving up costs in the long-term,” Kane said. 

People are hurting in America – health care costs too much and our health care outcomes leave much to be desired. PPI’s plan could cut health costs in the commercial market by almost half if fully implemented. 

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Gary Pearce: “NC races pose dilemmas for both parties”

Posted on by The Progressive Policy Institute

Original publication can be found here: https://newdayfornc.com/2019/09/11/nc-races-pose-dilemmas-for-both-parties/

This week’s special congressional races in North Carolina show that both Republicans and Democrats face big dilemmas in 2020. The difference is that Democrats have a choice about what to do, but Republicans don’t.

The Republican dilemma: Will President Trump hurt or help them in 2020?

One way you can look at the 9th Congressional District result is that Trump spells real trouble for Republicans in 2020: Dan Bishop won by less than two points in a district Trump won in 2016 by 12. It’s a district that was gerrymandered “with surgical precision” to favor Republicans, as a special three-judge panel recently wrote.

Or you can say Trump saved Bishop and he’ll boost Republicans in 2020: Bishop won even though he was opposed by a central-casting Democrat, a centrist businessman and Marine veteran who was well-funded and had been campaigning for 27 months. Bishop won, as Trump himself noted, after Trump had a rally in the district the day before the election, made a TV ad for Bishop and turned out his famously loyal base.

Either way, Republicans have little choice next year. Like it or not, they’ve got Trump. They’re like Captain Ahab tethered to a Great Orange Whale.

Democrats, on the other hand, have a choice. Their problem is that Tuesday didn’t make it any clearer what’s the right choice to beat Trump in 2020.

Nominate a Dan McCready-like centrist who can take swing voters from Trump – Joe Biden, for example? Or roll the dice, pick a candidate who risks being tagged a “socialist” and bet on turning out minorities, millennials and new voters looking for someone totally different from Trump?

One millennial Democrat described the choice to me this way: “Do we want a revolution or a restoration?”

Liberal and moderate Democrats were at each other’s throats before Tuesday. The results didn’t resolve the dilemma and debate.

As a former Democratic political consultant, I confess I have no idea what the right choice is. But I can assure you that Democrats are perfectly capable of making exactly the wrong choice, whatever it is.

Here’s a thought to ponder.

Something strange has happened in American politics the last few years. Maybe it started with the 2008 financial meltdown and the recession. Maybe it started on that terrible 9/11 day.

People all over the political spectrum, and from all walks of national life, are angry, disillusioned and anxious. They have lost confidence in politics, politicians and public institutions. They may be doing okay financially or they may be on the brink of bankruptcy, but they’re all uneasy about the economy.

They’re willing to throw the dice. In fact, they already have. They have elected the two most unlikely Presidents you could imagine: a cerebral African-American man who was serving his first term in the Senate and, then, a flashy promoter and reality TV star who had never served in public office.

Americans rejected the most traditional and respectable candidates you could imagine: John McCain, Mitt Romney and Hillary Clinton. In fact, Democrats almost rejected Clinton in 2016 in favor of Bernie Sanders, not even a Democrat, but a “democratic socialist.”

Maybe we want a return to normalcy. Or maybe politics has left the gravitational pull of earth. I wouldn’t bet against anything happening in 2020.

European App Economy Jobs Update, 2019

Posted on by The Progressive Policy Institute

In this note we update our previous estimates of European App Economy jobs. Our latest research estimates that the EU-28 countries (plus Norway and Switzerland)  have 2.093 million App Economy jobs as of July 2019.  That’s up 27% from the 1.642 million jobs that we estimated for January 2016 in our first European App Economy jobs report (released June 2016).  We follow the methodology described in the appendix to our 2017 European App Economy report. For a summary description of the basic approach, see the recent update on U.S. App Economy jobs.

We also estimate European App Economy jobs by mobile operating system. As of July 2019, there were 1.584 million jobs in the European iOS ecosystem and 1.693 million jobs in the European Android ecosystem. (The iOS and Android numbers add up to more than the total, because many App Economy jobs belong to both ecosystems).

European App Economy Jobs by Operating System (July 2019)*
(thousands)
Total app economy 2093
iOS ecosystem 1584
Android ecosystem 1693
*30 country total. Includes estimates for Norway and Switzerland
Data: ILO, PPI, Indeed

Our approach allows us to estimate European App Economy jobs by country and leading cities.  The top country for App Economy jobs is the United Kingdom, followed by France, Germany, the Netherlands, Spain and Sweden. The UK is the leader in iOS ecosystem jobs, with France closely followed by Germany.  France and the UK are tied for the lead in Android ecosystem jobs.

European App Economy Jobs by Country (July 2019)
(thousands)
Total app economy jobs iOS ecosystem jobs Android ecosystem jobs
Austria 25 19 21
Belgium 29 22 23
Czech 42 29 30
Denmark 52 41 37
Finland 48 37 42
France 350 236 296
Germany 296 233 239
Greece 10 6 8
Hungary 25 17 20
Ireland 20 16 12
Italy 94 70 77
Luxembourg 4 2 3
Netherlands 212 171 163
Norway 43 36 37
Poland 78 53 60
Portugal 37 28 27
Romania 24 19 21
Spain 101 77 82
Sweden 98 72 84
Switzerland 34 25 31
United Kingdom 366 295 296
30-country total* 2093 1584 1693
*Includes estimates for Bulgaria, Croatia, Cyprus, Estonia, Latvia, Lithuania, Malta, Slovakia, and Slovenia.
Data: ILO, Indeed, PPI

The top European city for App Economy jobs according to our research is London, followed by Paris, Amsterdam, Stockholm, and Berlin. Germany has a remarkable six cities in the top 30 and the Netherlands has four cities in the top 30. Noticeably missing from the top 30 list is Rome.

European App Economy Jobs by Major City (July 2019)
(Thousands)
Total app economy iOS ecosystem Android ecosystem
1 London 175 141 141
2 Paris 169 114 143
3 Amsterdam 84 68 64
4 Stockholm 56 41 47
5 Berlin 54 43 44
6 Rotterdam* 45 36 34
7 Barcelona 42 32 34
8 Helsinki 36 28 32
9 Copenhagen 34 27 25
10 Eindhoven 34 27 26
11 Madrid 33 25 27
12 Milan 30 23 25
13 Munich 30 23 24
14 Manchester 26 21 21
15 Utrecht 25 21 20
16 Oslo 25 21 22
17 Prague 25 17 18
18 Warsaw 22 15 17
19 Frankfurt 22 17 17
20 Stuttgart 21 17 17
21 Lisbon 21 15 15
22 Brussels 20 15 16
23 Cologne** 20 16 16
24 Budapest 20 13 15
25 Lyons 19 13 16
26 Hamburg 18 14 15
27 Zurich 18 13 16
28 Birmingham 16 13 13
29 Krakow 15 10 12
30 Dublin 14 11 9
*Radius around Rotterdam is only 45 kilometers to avoid overlap with Amsterdam.
**Includes Dusseldorf.
Urban areas are defined as 50 kilometers or 30 miles around a center city. We did not have data for urban areas in Bulgaria, Croatia, Cyprus, Estonia, Latvia, Lithuania, Malta,  Slovakia, and Slovenia.
Source: Progressive Policy Institute

We also looked at change in App Economy jobs by country over time. To reduce the effect of statistical noise, we compared the average of the 2016 and 2017 estimates with the average of the 2018 and 2019 estimates. We note that the only countries with declining App Economy jobs are Italy and Poland. The United Kingdom’s 5% increase is surprisingly small, and perhaps reflects the impact of Brexit. By contrast, Ireland’s App Economy employment rose by 24%.

Change in App Economy Jobs by Country, 2016-17 to 2018-19
(thousands)
2016-17* 2018-19** percentage change
Austria 20 32 64%
Belgium 24 28 14%
Czech Republic 29 35 19%
Denmark 40 50 26%
Finland 51 51 1%
France 244 287 17%
Germany 289 319 10%
Greece 7 8 11%
Hungary 17 19 14%
Ireland 14 18 24%
Italy 99 92 -7%
Luxembourg 2 3 31%
Netherlands 155 193 25%
Norway 46 51 11%
Poland 68 63 -7%
Portugal 29 34 15%
Romania 21 25 18%
Spain 82 92 12%
Sweden 82 95 16%
Switzerland 32 34 7%
United Kingdom 326 342 5%
*Average of 2016 and 2017 estimates. **Average of 2018 and 2019 estimates. Source: Progressive Policy Institute

 

U.S. App Economy Jobs Update, 2019

Posted on by The Progressive Policy Institute

In this note we update our previous estimates of U.S. App Economy jobs. Our latest research estimates that the U.S. has 2.246 million App Economy jobs as of April 2019.  That’s up 30% from 1.729 million that we estimated for December 2016 in our previous report (released May 2017).

That figure translates into a 12% annualized growth rate for App Economy jobs, compared to a 6.7% annual growth rate for computer and mathematical jobs over the past 3 years, and a 1.8% annual growth rate for all nonfarm private sector jobs.

Since fall 2011, we have done a total of six App Economy job estimates for the United States. The chart below lays out our published U.S. App Economy job estimates, starting with the first one in fall  2011 (released February 2012). These numbers include a conservative estimate of indirect and spillover jobs.

We also estimate U.S. App Economy jobs by mobile operating system. As of April 2019, there were 1.853 million jobs in the iOS ecosystem and 1.736 million jobs in the Android ecosystem. (The iOS and Android numbers add up to more than the total, because many App Economy jobs belong to both ecosystems).

U.S. App Economy Jobs by Operating System, April 2019
millions of App Economy jobs
All App Economy Jobs 2.246
iOS ecosystem 1.853
Android ecosystem 1.736
Data: PPI, Indeed.com

Summary Methodology

The methodology for generating these estimates is described in the appendix to the May 2017 US App Economy report. Since then, we’ve made some small technical adjustments to make the U.S. methodology consistent with our global methodology.

For this research, a worker is in the App Economy if he or she works in:

  • An information and communications technology (ICT) related job that uses App Economy skills— the ability to develop, maintain, or support mobile applications. We will call this a “core” App Economy job. Core App Economy jobs include app developers; software engineers whose work requires knowledge of mobile applications; security engineers who help keep mobile apps safe from being hacked; and help desk workers who support use of mobile apps.
  • A non-ICT job (such as human resources, marketing, or sales) that supports core App Economy jobs in the same enterprise. We will call this an “indirect” App Economy job.
  • A job in the local economy that is supported by the income flowing to core and indirect App Economy workers. These “spillover” jobs include local retail and restaurant jobs, construction jobs, and all the other necessary services.

To estimate the number of core App Economy jobs, we use a multi-step procedure based on data from the universe of online job postings, and described in detail in the methodology appendix of the May 2017 report. The source of the data is Indeed.com, which calls itself “the #1 job site in the world.”  Indeed’s API allows us to use Boolean search to identify App economy-related job postings.

Job postings are a powerful source of information about the skills being required by employers. For example, if a job posting requires that the job candidate have experience developing apps for iOS—the iPhone/iPad operating system—then we can reasonably conclude that the posting refers to a core App Economy job.

However, the number of job postings does not immediately translate into employment levels. The process for estimating the relationship between jobs postings and employment was initially described in a series of papers starting in 2012, when we produced the first-ever estimate of the U.S. App Economy. [i] We use an improved version of that methodology here, including a conservative set of multipliers relating indirect and spillover jobs to core App Economy jobs.[ii]

Future blog items will discuss App Economy jobs by state and by city.

[i] Michael Mandel. 2012. “Where the Jobs Are: The App Economy,” South Mountain Economics/Technet.

Michael Mandel and Judith Scherer. 2012. “The Geography of the App Economy,” South Mountain Economics/CTIA.

Michael Mandel and Judith Scherer. 2015. “A Low-Cost and Flexible Approach for Tracking Jobs and Economic Activity Related to Innovative Technologies,“ South Mountain Economics/Nesta.

[ii]  We assume that companies have one indirect job for every core app economy job. We then assume there are 0.5 spillover jobs for every core or indirect job.  This low number is consistent with the latest research on local job multipliers. See, for example. Timothy J. Bartik and Nathan Sotherland. 2019. “Realistic Local Job Multipliers.” Policy Brief, W.E. Upjohn Institute for Employment Research. https://doi.org/10.17848/pb2019-8.

Ritz for Forbes, “Projected Deficits Grew $872 Billion In Three Months. Here’s How To Rein Them In”

Posted on by The Progressive Policy Institute

A new report from the Congressional Budget Office projects federal budget deficits between 2019 and 2029 to be $872 billion higher than was projected just three months ago. As a result, Donald Trump will be forced to campaign for re-election next year with his government running a trillion-dollar deficit. Democrats should hold the “king of debt” accountable for his inability to manage the nation’s finances and present voters with a compelling alternative: a new progressivism that invests in our country without burying young Americans under a mountain of debt.

The increase in CBO’s deficit projections is largely due to the bipartisan budget deal signed into law this month and other spending policies enacted over the summer, which CBO says together will cost nearly $2 trillion – making them almost as expensive as the tax-cut bill enacted by Trump and the Republican-controlled Congress in 2017. Projected deficits also increased by almost $280 due to technical changes in CBO’s modeling. Partially offsetting these costs was a reduction in CBO’s forecast for interest rates, which brought projected deficits down by a whopping $1.4 trillion.

That a change of less than one percentage point in interest rates can cost nearly as much as the budget deal or the Trump tax cuts is a testament to the size of our national debt on which that interest is owed. The $16.5 trillion debt (which grows to almost $22.5 trillion if one includes intragovernmental debt such as that owed to the Social Security and Medicare Trust Funds) will only become worse moving forward as the government is projected to spend $1 trillion more than it raises in revenue every single year from 2020 onward if current laws remain unchanged.

Continue reading at Forbes.